Why 'Portability' could be the most important mortgage feature

Jesse Abrams - March 30, 2018, 4:07 pm

What is a Portable mortgage?

If you are selling your home to buy a new one, a portable mortgage allows you to transfer your existing mortgage to a new property without incurring any pesky early payout penalties. This includes the transfer of your mortgage balance, interest rates and terms and conditions.

        

You may want to consider porting your mortgage if

  • you have favourable terms on your existing mortgage

  • you want to avoid prepayment penalties for breaking your mortgage contract early

Reach out to our team to see if your mortgage is eligible for porting. We can help you find out any restrictions that might apply.

        

Porting your mortgage to a home that costs less

If your new home will cost less than the amount you owe on your mortgage, you may be required to pay a prepayment penalty.

Find out how prepayment penalties are calculated.

      

Porting your mortgage to a home that costs more

If you need to borrow more money for your new home ask your lender for details.

If your lender agrees to lend you more money:

  • your final interest rate may be blended into a combination of your old interest rate and the new interest rate

  • your lender may charge you the current interest rate on the additional money you borrow

  • you may have to pay for an additional amount of mortgage loan insurance

     

If you can’t port your mortgage

You will need to cancel your mortgage and incur large penalties. Depending on your mortgage type (fixed or variable). Examples of penalties could be 2-3% of your remaining mortgage or the greater of your Interest Rate Differential or 3 months of interest. These can be very substantial. Major banks often have larger penalties based on at time having a larger Interest Rate Differential based on a "discounted" rate model. This is something to be very aware of as it could lead to upwards of tens of thousands in expenses. 

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savings, Portability, move, feature

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